Mind the knowledge gap

27th July 2020

ome people still struggle to make informed retirement decisions The decisions made at retirement are big ones and have long-term consequences. Many spend years accumulating a large amount of money in pensions and other savings, but really don’t know what that might mean, how much income they can reasonably expect to receive and how best to take that income.

It is worrying, but perhaps unsurprising, that a significant number of people do not know how much they have saved for their retirement and what it will provide them with. Some people find it difficult to keep track of their savings if they are all in one place, so you can imagine how complicated it becomes if people have more than one pot in different schemes. This view is further supported by a new YouGov survey[1] which highlights that fewer than half of those aged 50 to 65 know how much income their pension and savings will generate when they retire. It highlights that women are less likely than men to know about their post-retirement income. ‘Knowledgeable’ about retirement options Yet the majority of working 50-65-year-olds say they are ‘knowledgeable’ about retirement their options. Four in 10 (43%) working 50-65-year-olds who expect to retire know how much annual income they’ll receive from their pension and savings. The findings come despite the Financial Conduct Authority (FCA) introducing measures to help people make the most of their pension savings earlier this year by refreshing the retirement ‘wake up packs’. The move followed the regulator’s conclusion that those approaching retirement, acting without guidance or advice, were struggling to make informed decisions. Results show significant geographic disparity Geographically, the results show significant geographic disparity, with only a third of Londoners (34%) knowing how much they’ll receive post retirement compared to a more than half of those in the East of England (52%). Additionally, there is a notable drop in awareness amongst those who are divorced or separated (37%) and never married (34%) compared to those who are married or in a registered civil partnership (46%). Entering drawdown without taking financial advice Backing up the FCA’s estimate that 100,000 people enter drawdown ever year without taking financial advice[2], the study also found that the majority (53%) consider themselves ‘knowledgeable’ about their retirement options. More men consider themselves knowledgeable (57%) than women (48%.) Across the UK, those in the East of England (60%) are the most confident in their knowledge of retirement options, Yorkshire and Humber is the least (49%). Source data: [1] Research conducted for Standard Life. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,003 working adults aged 50–65, of which 1,935 expect to retire. Fieldwork was undertaken between 18 and 21 October 2019. The survey was carried out online. [2] FCA proposes rules on investment pathways and other measures to improve retirement outcomes for consumers – https://www.fca.org.uk/news/press-releases/fca-proposes-rules-investment-pathways-and-other-measures-improve-retirement-outcomes-consumers